Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor presents her maiden Policy Address blueprint to the media at Central Government Offices at Tamar in Admiralty, Oct 11, 2017. (ROY LIU / CHINA DAILY)
HONG KONG - Hong Kong's Chief Executive Carrie Lam Cheng Yuet-ngor started her "2017 Policy Address" to the Legislative Council shortly after 11 am on Wednesday.
She began her speech with a reference to huge public expectations and asserted that the voice of the public immensely mattered to her.
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At the same time, Lam iterated that as per suggestions from the Non-official Members of the Executive Council, she would use the opportunity to share with Hong Kong people her governance philosophy and to highlight some specific measures.
In a hugely awaited policy decision, Lam announced that the tax levied on the first HK$2 million profit posted by enterprises had been halved to 8.25 percent. She said a standard profits tax break of 10 percent as proposed in her Election Manifesto had been deepened but stressed that profits above HK$2 million would continue to be subject to the standard tax rate of 16.5%. However, attendant restrictions would ensure that each group of enterprises only nominate one enterprise to benefit from the lower tax rate.
She also announced a structured tax rebate for research and development (R&D) activities. To encourage R&D investment by enterprises, the first HK$2 million eligible R&D expenditure would enjoy a 300-percent tax deduction with the remainder at 200 percent.
Innovation & Technology
In keeping with her government’s avowed focus on innovation and technology (I&T), Lam announced that HK$700 million would be earmarked to develop Hong Kong as a smart city. She said she would personally lead a high‑level, inter‑departmental Steering Committee on Innovation and Technology.
Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor delivers her maiden Policy Address at the Legislative Council on Oct 11, 2017. (PARKER ZHENG / CHINA DAILY)
For quite a long time, a variety of problems have persisted in the community. Some of them have been set aside due to incessant arguments. Some of them have not been taken forward for fear of criticisms. The current-term government sets no easy goals and avoids no difficult tasks
HK Chief Executive
The CE said that in order for Hong Kong to develop into an international I&T hub, her government would step up efforts in eight key areas: resources for research and development (R&D), nurturing a talent pool, venture capital, scientific research infrastructure, legislation review, opening up data, government procurement and popular science education.
Research and development
Lam said the city's gross domestic expenditure on R&D as a percentage of the Gross Domestic Product (GDP) would be increased from the current 0.73 percent to 1.5 percent within the current-term government’s five-year tenure.
In order to attract fresh talent, her government would earmark no less than HK$10 billion as university research funding. This apart, the Education Bureau will make available HK$3 billion to provide studentships for local students admitted to University Grants Committee-funded research postgraduate programs.
The Innovation and Technology Bureau would launch a HK$500 million “Technology Talent Scheme”, including the establishment of a “Postdoctoral Hub”.
Elderly and special needs care
As a CE keen on improving the quality of Hong Kong people’s lives, Lam promised more policies for the underprivileged and those with special needs. She pledged to reduce the waiting time to zero for two kinds of services: first, pre-school rehabilitation services for children with special needs and second, appropriate home and community care services for the elderly in need of support, including those discharged from hospital.
The government would increase the places for pre-school rehabilitation services from 3,000 to 7,000 and the number of community care service vouchers from 3,000, from as early as this year, to 6,000. Lam stressed her government was ready to allocate more resources in order to achieve the target of zero waiting time.
Lam said her government would also be setting up a Special Needs Trust for needy parents so that the care of their children with intellectual or other disabilities would continue uninterrupted through use of assets left behind.
For her much-lauded “Starter Home” scheme, Lam set the salary cap at HK$34,000 for singletons and HK$68,000 for households with two or more members.
She said her administration would work to expand the scope of the Housing Authority-piloted Green Form Subsidised Home Ownership Scheme and make it a part of the comprehensive public housing scheme.
In order to ease the housing bottleneck, she shared how her administration would optimize vacant government buildings, expand the sharing home scheme by allowing owners to rent to the low-income income at a discount, and add more combination homes.
Lam also announced a non-means tested monthly transport subsidy for commuters with monthly transport expense exceeding HK$400. A government subsidy amounting to 25 percent of the actual expenses in excess of this level will be capped at HK$300. This will be available across the transportation spectrum comprising MTR, bus minibus, tram, ferry, benefiting 2 million people.
And, in an announcement that would gladden HK society that is grappling with a low birth rate, Lam announced statutory paternity leave would now be increased to five days from current three. And she said her government would be commencing a study and related work on extending the duration of the 10-week statutory maternity leave.
The monthly subsidy payable through Low-income Working Family Allowance Scheme for a four-person household with two eligible children will increase by 23 percent from the current HK$2,600 to HK$$3,200 if the monthly household income is HK$19,000 or below.
Also, patients with uncommon disorders will receive subsidies for specific drug treatments according to individual patients’ special clinical needs as well as subsidies for eligible patients to participate in compassionate programs of individual pharmaceutical companies.
Lam announced a comprehensive review of entry requirements relating to Chinese proficiency in civil service posts so as to increase government job opportunities for the ethnic minorities.
The CE vowed to expand the participation of young members of society to 15 percent in government committees.
Lam announced that the Central Policy Unit had been reconstituted as Policy Innovation and Coordination Office.
When contacted, Venture Investors Alliance of Hong Kong (VIA) welcomed Lam's proposal of increasing expenditure on research and development and training talents, and establishing an Advisory Committee on Innovation and Technology. The Alliance suggested the government establish a related regulatory institution and set up a financial institution alliance.
VIA convener Nisa Leung said the government could pick some industries to act as an entrepeneural catalyst to attract more startups and talents to HK.
Alva To, vice-president and head of consulting for Greater China at Cushman & Wakefield, felt the government should lower the monthly income ceiling for first-time home purchasers to HK$17,000. He said the government could launch a property leasing scheme and allow tenants first option on purchase subject to a tenancy duration of 10 years. He felt the government could cooperate with banks to ensure a 90 percent mortgage offering.
Justin Chiu Kwok-Hung, executive director of CK Asset, said the proposal of encouraging first-time home buying by developing units on land bought by government or setting up title terms requiring private property developers to set aside stipulated number of units for first-time homeowners was an excellent concept but needed further discussion.
Ricky KY Wong, a director of Wheelock Properties (Hong Kong), said the government proposal to put on market more units for first-time home buyers would help stabilize Hong Kong’s property market without adversely impacting land price. He said that the public and private partnership model in property development had been tried and tested and that Wheelock was interested in taking part in initiative.
Clement Chan, partner of Grant Thornton, said the proposed two-tier profits tax system would save each company HK$160,000 per year. This could translate into reinvestment, boosting the economy and could also push up wages. He did not believe that the new policy would have a big impact on the government’s tax revenue as profits tax merely comprised 25 percent of the government's total tax revenue and 80 percent of it came from large enterprises.